JILPT Research Eye
60 Years of "Spring Offensives"

August 27, 2015
(Originally published on May 15, 2015 in Japanese)


Noboru OGINO

Director for Policy Issues, Research and Statistical Information Analysis Department

"Spring Offensive" reaches its third turning point: Thoughts on the 60th anniversary

The shunto or "spring offensive", annual spring round of wage negotiation that has had a huge impact on wage determination in Japan, reached its 60th anniversary this year.

The importance attached to the spring offensive had become somewhat diluted in recent years, but interest has been re-awoken by successive expansions in pay hikes over the last two years, partly in response to an agreement reached at the "Tripartite Conference to Realize a Virtuous Cycle in the Economy". As part of our effort to gather information on domestic labor, the Research and Statistical Information Analysis Department has been particularly active in gathering information on the spring offensive in the last two years[Note 1]. The spring offensive now stands at its third major turning point, and especially as it has reached this 60-year milestone, in this article I would like to consider its significance while tracing its historical development.

There are various views as to when the spring offensive started. But this year would mark the 60th anniversary if we take 1955 as the starting point by the fact that it was when collective action was taken for the first time by the eight major industrial unions (the Japanese Federation of Synthetic Chemistry Workers’ Unions, the General Federation of Private Railway Workers' Unions of Japan, the All Japan Electric Workers Union, the Japan Coal Miners' Union, the Japanese Federation of Pulp and Paper Workers' Unions, the Japan Federation of Metalworkers' Unions, the National Federation of Chemical Industry Workers' Unions, and the Japanese Electrical Electronic & Information Union). In 1955, Japan was in transition from postwar reconstruction to a period of economic expansion. It was the year when the "1955 system" was established, following the formation of the Liberal Democratic Party (LDP) through a merger of conservative parties and the unification of right and left branches of the Socialist Party. It was also when Japan's economy recovered to its prewar level and the Japan Productivity Center was launched.

The spring offensive was initially proposed by Kaoru Ohta, Chairman of the Japanese Federation of Synthetic Chemistry Workers' Unions. He expressed this form of struggle with the words, "It is worrying to walk alone at night along a dark road, but if we all walk hand in hand, we will feel secure". His aim was to raise the bargaining power of the unions based on unified struggle by industrial unions rather than by individual company unions.

At first, the method employed in the spring offensive often resorted to going on strikes to demand wage increase, mainly by unions affiliated to the General Council of Trade Unions of Japan. This drew harsh criticism in that "It is nothing but political struggle or class struggle in the name of economic demands" (Nikkeiren, the Japan Business Federation), and "The spring offensive is reckless action that aims to disrupt and paralyze Japan’s socio-economy while satisfying its own political ambitions and aspirations to revolutionary struggle" (LDP).

Nevertheless, the spring offensive rode the wave of high-level economic growth from the 1960s. Aided by the Ikeda administration’s "income doubling plan", the unions raised the slogan of achieving "wages on a par with Europe" from 1963, and thrust themselves onto a direction of high wage increases. As a result, annual pay hikes of at least 10% were achieved for twelve straight years from 1964.

First oil crisis halts high-level growth: The "demise of the spring offensive" was announced

Then the spring offensive reached its first major turning point. The first oil crisis in 1973 stopped the economic boom in its tracks. Hoarding, reluctance to sell, and other reactions led to the appearance of a "price frenzy", in which wholesale and consumer prices rose by more than 20%. In 1974, real GDP recorded its first negative growth since the war. The 1974 spring offensive was waged on the grounds of this high rate of inflation, and resulted in the settlement of a massive pay hike of 32.9% (as the average for principal enterprises). However, the government and management urged a guideline limit of 15%, arguing that it could result in hyperinflation if pay raises were to continue at the same level. For their part, the unions also rethought their pattern of demanding annual increments on the previous year’s actual figure. In the 1975 spring offensive, they shifted to a stance based on the "economic consistency theory", a restrained wage demand focused on consistency with the national economy. As a result, the average pay hike in 1975 fell to 13.1%, since when two-digit wage increases of 10% or more have disappeared from view.

In labor circles, assessments of this outcome were divided neatly in two. The Federation of Steelworkers’ Unions, which had advocated the consistency theory, evaluated it as "acceptable, at least in terms of the national economy, as a wage raise in a period of transition to a stable economy". On the other hand, the reaction of the Japanese Federation of Synthetic Chemistry Workers’ Unions, a leading industrial union since the start of spring offensives, was the opposite. "We must recognize that the 1975 spring offensive has been completely defeated", it commented.

Whatever the case, these developments signaled an end to the "policy of high wage increases". Even Kaoru Ohta, original proponent of the spring offensive, declared as much in his book Shunto no Shuen ("Demise of the Spring Offensive") (1975).

Crisis of international competitiveness and prolonged deflation bring the "base-up spring offensive" to an end

Partly due to this shift by unions towards restrained pay raises, Japan was quicker to escape from "stagflation" (simultaneous progression of economic recession and inflation) than other developed nations, and thus entered a period of stable growth. To address inflation, western developed nations adopted "income policies", whereby governments intervened in wage determination. But in Japan’s case, that storm was weathered through negotiations premised on labor and management autonomy.

However, when the "bubble economy" starting in the late 1980s collapsed, the Japanese economy became mired in a long-term recession. Now, the spring offensive faced a new crisis. With progressive deflation from the late 1990s on top of the economic downturn, the unions' system of "base-up" wage demands premised on inflation (i.e. "regular pay raise + past fiscal year price rise + improved living standards") also lost its effectiveness. And with it, the rate of wage increase fell straight down.

From the beginning of the 2000s, the economy faced a crisis of international competitiveness, due partly to the fundamental strength of the yen. With other factors including the collapse of the information-technology bubble, stabilizing and securing employment became the top priority issue for both labor and management. Partly because of this, Keidanren (the Japan Federation of Economic Organizations) declared, in its Management Labor Policy Committee Report (December 2002) published in advance of the 2003 wage negotiations: "This marks the demise of the ‘spring offensive’, in which labor unions table wage-raise demands and ‘struggle’ with the intention of social leveling backed by the use of force." It also stated that "In order to maintain and strengthen corporate competitiveness, it will be difficult to raise nominal wage levels from now on, and base-up pay raises are out of the question. In fact, freezing or revising regular pay raises by reforming wage systems could become a topic of dialog between labor and management." In other words, it was advocating reforms of wage systems including not only "zero base-up" but also the very approach to review regular pay raise system.

Similar trends could also be seen on the union side. In the 2003 spring offensive, the Japan Council of Metalworkers' Unions, which served as a market price leader together with Rengo (the Japanese Trade Union Confederation), abandoned uniform demands for base-up pay raises for the first time. Since then, the unions have altered the function of the spring offensive from "demands based on base-up raises" to "minimum priorities".

With this, the spring offensive with its focus on base-up demands faced its second major turning point.

Transformation of "spring offensive" functions prompted by tripartite dialog

The spring offensive is now reaching its "retirement age" in human terms, and like professional life, it has never been smooth sailing. Nevertheless, despite twice receiving the announcement of its "demise" from both labor and management, it is now about to take a new step forward. The opportunity that has prompted this revival of the spring offensive is the tripartite conference set up by the Abe administration in the hope of creating a virtuous cycle in the economy.

Looking back, however, at the transformation of the spring offensive, not only this tripartite conference but the presence of a "platform" for tripartite dialog has also been of major significance in this process.

In the 1975 spring offensive, Yoshiji Miyata, Chairman of the Federation of Steelworkers’ Unions, proposed a shift to a "previous year's figure minus alpha" system and advocated the economic consistency theory, ahead of the other industry-based unions. He recalls that the groundwork for this was laid by "Sanrokon"[Note 2]. Sanrokon, or the Round Table Conference on Industry and Labor, had been established as a private advisory body to the Minister of Labour in 1970. It provided a platform for regular round-table talks on industrial and labor policies in general by government, labor and management leaders as well as academic experts. The Prime Minister and key Cabinet Ministers were also invited as guests, information was exchanged on the basis of government reports, etc., and mutual understanding was enhanced.

Meanwhile, during the employment crisis that started in 2000, the tripartite Worksharing Study Conference in March 2002 confirmed "the basic principle of Japanese-style worksharing". The unions would tolerate wage restraint associated with shorter working hours, and agreed to a policy framework on measures to maintain and create employment based on worksharing.

Conclusions on the future direction for wages and employment are ultimately to be reached through negotiation and discussion premised upon labor-management autonomy in individual companies. Nevertheless, at this important point when the Japanese economy faces a major crisis, we can see that a "platform" for tripartite dialog is of major significance.

The tripartite conference has confirmed that ongoing wage increase will be required in order to create a virtuous cycle in the economy, with a view to escaping from deflation. As well as the aforementioned announcements of the "demise" of the spring offensive from both labor and management, its limits and impasses have been pointed out on numerous occasions by the media, academic experts and others. But the spring offensive has survived. As it reaches its 60th anniversary, the spring offensive, though playing a different social role than hitherto, could be said to have turned a new page in its history.

Note 1. Trends involving the National Centers, industrial unions, and others are provided as articles in the twice-weekly "Mail Magazine Labor Information", while the June issue of Business Labor Trend dated May 25, 2015 includes a special feature on "Trends in the 2015 Spring Wage Negotiations". Please see these for more detail. (Both in Japanese only).

Note 2. Yoshiji Miyata, Kumiai Shugi ni Ikiru ("Living in Unionism") (2000, The Japan Institute of Labour, p.92). This work includes an interesting episode explaining that the idea of a platform for round-table talks between high-level experts and members of the government, labor and management was conceived when he was playing Game of Go with Ichiro Nakayama, Chairman of the Japan Institute of Labour (forerunner of JILPT).